A Guide to Music Performance Royalties, Part 1

Let’s start at the beginning. Broadly speaking, each recording of a song contains two copyrights: the copyright in the “musical work” or what is commonly called the “song” and the copyright in the recording of the song, commonly called the “track” or the “master”.

90% of all mistakes made by anyone in discussions of the online music business (and really the music business in general) starts right there. If you made this mistake, don’t feel self-conscious. You are not alone, believe me. Sometimes shockingly not alone.

Ownership and the Inception of Creation. A song is not a recording and a recording is not a song. Each can be, and usually is, created by different people. Songs are created by a “songwriter” (usually teams of songwriters coming together to write a single songs or many songs). Recordings are created by “artists,” usually teams of artists known as a group or a band. Songwriters may be artists and artists may be songwriters, but not every songwriter is an artist and not every artist is a songwriter. Artists may, however, elect to record only their own songs, and only write songs with members of a band. On the other hand, artist-songwriters may co-write with non-artist-songwriters occasionally or frequently. The songwriting team of Bryan Adams and Jim Vallence comes to mind as an example, as does Elton John and Bernie Taupin. Jim and Bernie were not featured artists on the recordings of their songs.

People who invest in songwriters are called venture capitalists–actually, no, venture capitalists never invest in songwriters, they invest in people who profit from songwriters after they have hits. More of a bounded random walk or a “monkey with a dartboard”.

No, people who invest in songwriters are called “music publishers”. The word “publisher” in the music business does not mean the same as the word “publisher” used in the game business. In return for their investment, publishers get ownership or “administration rights” (a kind of control) over the songs they invest in.

People who invest in artists are called “record companies” sometimes “record labels”, but never “music labels”. In return for their investment, they get ownership or control over the songs or sound recordings they invest in. (Love/hate relationship begins here.)

Monkeys with dartboards have a short life expectancy at music publishers and record companies.

The respective copyrights in songs and sound recordings are usually owned by different people and may be owned by still more different people depending on the territory concerned and the agreements among the songwriters and the separate agreements with the artist.

The songwriter/artist relationship results in the following table of royalty payments. Each royalty can be broken down into different payments streams depending on the use involved. Note–so far, the government is not involved. To be continued in Part 2.